South-East Asia chooses digital payments to break free from the dollar

Elizabeth Smith

Having become firmly established during the Covid-19 pandemic, transnational payment systems using smartphones and QR codes are generating a real revolution in the countries of South-East Asia, which are moving towards a new era of cooperation and regional integration.

Boom in new digital payments

The countries of South-East Asia are experiencing a real boom in cross-border payments via QR codes (Quick Response Codes).

Thanks to the new cross-border payment systems, citizens of those countries who are abroad are able to pay for goods and services by scanning QR codes with their smartphones. Two main advantages. The movement of goods within the region is simplified and transaction costs are reduced by up to 30 per cent.

New payment systems have definitely taken off during the pandemic that has triggered a growth trend that knows no end. With 125,000 new internet users per day and as many as 460 million consumers involved, the digital economy of ASEAN countries will add $1 trillion to the regional GDP between now and 2030, making South-East Asia the fastest growing online market in the world.

Read also: The Global Financial Center Index 2023: the cities at the centre of world’s finance

Access to new credit lines

In a region where 99% of companies are small and medium-sized enterprises (SMEs), the development of cross-border digital payments also seems destined to expand their activities abroad.

But for SMEs, the most significant benefit seems to be the ability to access new lines of credit. Which are crucial in a region where 60% of businesses say they are unable to access the financing they need.

Ultimately, the digital world seems to herald a new phase of dynamism for the ASEAN economy, and the region’s governments are so aware of this that they addressed the issue at the last summit last May. But there may also be more behind the executives’ efforts.

Towards de-dollarisation?

Cross-border payment systems convert the national currency of the buyer directly into the local currency of the recipient. This brings many advantages in terms of reduced transaction costs resulting from the dual currency exchange and the fees charged by international circuits. But the real benefit of moving away from established trade currencies such as the dollar may be another.

It was the Fed’s aggressive restrictive policy and the dollar’s fluctuations on the international markets that made many countries wary of the greenback, especially after the US started using it as an economic weapon against its political opponents.

In this regard, Ispi notes how the growing tensions between the US and China are not benefiting the region’s economy, which is maintaining a neutral stance so as not to damage the deep economic ties with the Dragon.

While the data therefore show, at least for now, a relative resilience of the dollar’s supremacy, which will not be challenged by retail payments still accounting for a negligible share of trade, it is not certain that the same will hold true in the future.

Read also: Digital Euro, what is it and how the EU proposal works: it will not be a cryptocurrency

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